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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

A client with a demat account asks how a Treasury Bill differs from a dated G-Sec in terms of its features. Which statement is correct?

Treasury Bills are short-term government money market instruments with maturities of 91, 182 or 364 days. They pay no coupon, are issued at a discount to face value and are redeemed at par, unlike dated G-Secs, which pay periodic coupons and have longer tenors.

  1. ATreasury Bills are short-term money market instruments of up to one year issued at a discount and redeemed at face valueCorrect
  2. BTreasury Bills pay semi-annual coupons for ten years
  3. CTreasury Bills are issued only by corporates
  4. DTreasury Bills have maturities above 10 years

Explanation

Treasury Bills are issued by the Government of India with maturities of 91, 182 and 364 days. They carry no coupon; they are issued at a discount and redeemed at par. Dated G-Secs, in contrast, pay coupons and have longer maturity.

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